Economic development in Alaska: taking stock of our opportunities
This is Part One of a five-part series exploring economic development themes in light of Alaska's current economy.
- Part 1: Opportunities
- Part 2: Workforce development
- Part 3: Marketing and attraction
- Part 4: Entrepreneurship and small business
- Part 5: The Future
Jeff Stepp thinks Alaska is at an inflection point: “It’s a pivotal time in Alaska’s history and economy because of the confluence of the loss of federal earmarks and the decline of the price of oil, which contributed greatly to our economy during the last 40 or 50 years.”
Stepp, the Economic Development Coordinator for the Fairbanks North Star Borough, doesn’t like seeing empty buildings in his community. He’s not alone; with “pivotal times” comes a hefty dose of discomfort… and opportunity.
Amidst Alaska’s recession, economic developers across the state are working to course correct from a reliance on the aforementioned federal earmarks and oil revenues to a more balanced, resilient economy. Taking advantage of our unique geography, human capital, and the transformation of our existing industries just might propel us into an economically vibrant future.
A transformation of this depth and breadth won’t be easy; along with a stubborn hope that climbing oil prices will solve our state budget woes, many are quick to bemoan challenges of doing business in Alaska. Economic developers often site the high costs of energy, real estate, and labor; limited infrastructure; a small population; and distance from markets as barriers. But after acknowledging our limitations, the conversation turns from challenges to opportunities, and that’s when it gets interesting.
Brigadier General Billy Mitchell once remarked that “Alaska is the most strategic place on earth.” Britteny Cioni-Haywood, director of the State of Alaska Division of Economic Development, notes that “our geographical location is becoming more and more of an advantage as we move into a global economy.”
Boasting the fifth largest cargo airport in the world and already an important stop for intercontinental shipping, the emerging Northern Sea Route and the Northwest Passage will make Alaska an even more valuable player in the transportation of goods.
Economic development is a program, group of policies, or activity that seeks to improve the economic wellbeing and quality of life for a community, by creating and/or retaining jobs that facilitate growth and provide a stable tax base. — International Economic Development Council
Two squadrons of the fifth-generation fighter jet F-35 will be arriving at Eielson Air Force Base in 2020. (AP Photo/U.S. Air Force, Senior Airman Julianne Showalter)
Alaska’s location also makes it a critical component in the United States’ global defense framework. In a recent issue of Military Review, U.S. Army Colonel Michael J. Forsyth wrote that Alaska “is singularly closer to many national capitals in the hemisphere than most points in the lower forty-eight states. This makes Alaska the perfect power projection platform for the United States from a military standpoint.” Alaskans have seen increased military investment in our state during the last few years, most recently from the 2018 appropriation of $168.9 million for construction projects at Eielson Air Force Base in preparation for two squadrons of F-35 Lightning II aircraft arriving in 2020.
Military investment can reach further than the infusion of cash into the state; with increasing engagement in the innovation economy, Stepp says that there is “tremendous potential for vibrant partnership between the military, municipalities, universities, and businesses.”
He points to the Wright-Patterson Air Force Base in Ohio as an leader in using research and development to leverage innovation; events like Dayton’s “Commercialization Catalyst” feature presentations about Air Force Research Laboratory technologies that are candidates for entrepreneurs to bring to commercial markets. Following this model, or one like it, would accelerate the creation of scalable startups in state.
Alaska's human capital is an important part of the state's economic future. (Photo/University of Alaska Center for Economic Development)
Alaska is ripe for this type of strategic approach; an often overlooked “natural resource” is our people. Nolan Klouda, Executive Director for the University of Alaska Center for Economic Development, is the lead author of the Emerging Sector Series, which assesses and defines the growth potential of economic sectors. He sees an overlooked knowledge economy in Alaska: “We’re home to a sizable professional services workforce. These are the engineers, consultants, and other specialists who possess rare knowledge in fields like renewable energy or aviation. But we have relatively few companies working on a new product or piece of software that could scale. If that valuable knowledge could be funneled in an entrepreneurial direction, we could see a new generation of high growth companies.”
Klouda thinks this could mean new industries in the state that would hire Alaskans.
Our knowledge workers largely came into existence performing services for the resource sector and, just as they are poised to innovate, so too are the industries they hail from. Alaskan companies can be leaders in identifying or improving upon new technologies, markets, partnerships, and ways of doing business. “Alaska’s traditional industries require smart, skilled people in order to function. And that skillset will help propel us into the global knowledge economy,” says Klouda.
As we capitalize on new opportunities, we must also strengthen our existing visitor industry and support responsible development of our natural resources. This will lead to economic growth and new state revenues. Cioni-Haywood points out that to maximize our resource wealth we need to transition from predominantly extraction to value-added resource development. This means activities like refining more of our own fuel or processing salmon into high-value products rather than shipping whole.
Back to Stepp, and those empty buildings: “I also see an opportunity for a new business, a new entrepreneur, a new idea to fill that space. We have to be sure that we are using all of the available economic development tools – from education and workforce development to best practices to investment and incentives – to transition to a prosperous future for the next generation of Alaskans.”
During this pivotal time “as a state, as a community, we need to be more scrappy and resourceful to keep our economy afloat.”
It’s time to get scrappy, Alaska. Our future depends on it, and opportunity awaits.
Gretchen Fauske is marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. As the associate director for the University of Alaska Center for Economic Development she is responsible for leading the entrepreneurship, marketing, and outreach efforts of CED as well as providing strategic leadership for both CED and the UAA Business Enterprise Institute.